CV Market Tracker - August 2021

• Average selling price of a used van hit five figures in June and July
• Higher prices come despite a ‘seasonal’ summertime fall in demand
• Demand for Euro 6 stock is expected to surge in Q4 with the introduction of London’s expanded Ultra Low Emissions Zone (ULEZ) in October

The average selling price of a used van sold at a Manheim auction was over £10,000, for the second consecutive month, according to Cox Automotive. This follows an increasing trend in used van values, first seen in the first four months of 2021, as well as June and July.

In July, Manheim auctions saw the average selling price of a used van at £10,189, with an average age of 61 months and 73,493 miles. Although this represented a slight reduction of £33, compared to the record-breaking result in June, both mileage and age did increase by one month and 2,650 miles respectively.

The figures are especially notable when compared to the same month 12 months ago, and at a pre-pandemic July in 2019. Used vans achieved £2,110 or 26% more compared to July 2020, despite being three months older and having 4,673 more miles. Comparing today’s average LCV selling prices with a pre-pandemic July in 2019, vans are achieving £3,721 or 57% more, with today’s vans being two months older and having 1,886 more miles.

Matthew Davock, Director of Commercial Vehicles, said: “It will come as no surprise to many, that buyers of vans are paying more because of the supply shortages in the used market, which Cox Automotive warned previously would continue until next year, when the supply issue is resolved.    
“The overall wholesale return volumes remain a challenge, especially in the fleet/leasing LCV sector, with many who did sell volume in July reporting a reduction of 36-43% compared to traditional month returns. The buzz-word in this sector, as well as many other sectors right now, is ‘customer extensions.’”

Due to the overall global new manufacture challenges and the lack of new vehicle supply and availability in the UK, many customers’ replacement orders have been extended into Q1/Q2 2022. This has become a tough financial dilemma for the fleet and rental sectors.

Davock added: “This is because there’s simply never been a better time to sell a used van. Those lucky enough to be selling used vans are enjoying strong profits, even though their extended product stock has both higher maintenance and higher mileage concerns.”

Higher used prices come despite falling summertime demand at retailers

The first-time conversion rate reduced by 6%, compared to June 2021, with seven out of 10 vans selling first time. This corresponded with Cox Automotive data on buyer retail feedback, which suggested that the seasonal feel of pre-pandemic summers had returned.

The data also revealed that 66% of independent and 58% of franchise LCV dealers reported that July was the lowest performing month in the past 12 months for retail activity.

Davock added: “In a normal year, this is to be expected. We are in peak holiday season, with many van dealers taking vacations and downtime for the summer. The difficulty is that we have not felt the seasonal slowing of the market for over 24 months – we witnessed a strong post-Covid bubble in July/August 2020.  The slower retail activity has been more noticeable, with many buyers being cautious or prioritising the cleanest stock or replacing any sold stock with similar models and specification.”

Higher Euro 6 stock demand in Q4 expected

From the 25th October 2021, the Ultra Low Emissions Zone (ULEZ), currently in force in central London, will extend to create a far larger zone up to the North and South Circular roads. This is expected to drive demand for vehicles that meet the ULEZ standards, with a positive impact for retailers stocking Euro 6 LCVs.

July saw Euro 6 stock representing 59% of the volume sold through Manheim auctions – another record-breaking figure – with the average age and mileage of 37 months and 55,136 miles respectively, making an average price of £13,426. Today Euro 6 vans are achieving £2,245 or 22% more than pre-pandemic levels.

Davock concluded: “The marketplace remains positive and healthy, but the seasonality feel will require vendors, buyers and retailers to remain patient throughout the summer months. Based on our feedback around supply, I do not foresee a traditional spike in volume during September/Q4 for LCV product.

“In my opinion, many independent dealers will see this as very strange and won’t believe it, but the volume will be the lowest wholesale numbers the used market has even seen on record during Q4 in the UK. Therefore, from this we will continue to see demand outstrip supply and the overall performance measures will continue to rise, especially in the Euro 6 used LCV sector.”